TMI Blog2016 (6) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act. Since the income of the assessee is exempt in view of these sections, the income of the assessee is not taxable under the head "income from business or profession", appearing in Chapter-IV of the Income Tax Act. Section 40(a)(ia) of the Act is a part of Chapter-IV for the purposes of computing the income under the head "business income". We are in agreement with the submissions of the assessee and also the findings of the learned CIT (Appeals) that the provisions of section 40(a)(ia) of the Act can be invoked only for the purposes of computing the income under the head "business income". Since the income is not computed under this head, the provisions of section 40(a)(ia) of the Act cannot be invoked. - Decided in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act. 4. Before the learned CIT (Appeals), the assessee made detailed submissions with regard to its contention that out of all these payments, since the amounts involved were not exigible to Income Tax Act, there was no need to deduct TDS, therefore disallowance under section 40(a)(ia) of the Act cannot be made. The learned CIT (Appeals) after considering the submissions of the assessee, allowed the appeal of the assessee stating that the disallowance under section 40(a) (ia) of the Act is not warranted in view of the grant of exemption under section 10(23C)(iv) to the assessee by the Commissioner of Income Tax, Panchkula. for the year under consideration. Further, the learned CIT (Appeals) stated that the penalty proceedings m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of such sections or else the income is taxable under different heads of the income as per the provisions under Chapter-IV of the Act. In this way, he tried to demonstrate that the Act makes it very clear that all persons who are entitled to exemption of income under sections 10 or 11 of the Act are first liable to tax under the Act In other words, persons entitled to exemption of income under sections 10 or 11 of the Act are chargeable to tax under different heads of income including the head profits and gains of business or profession . For this proposition, reliance was placed on a decision of Mumbai Bench of the Tribunal in the case of Green Emirate Shipping Travels (2006) 100 ITD 203 (Mum). In this view, it was prayed that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the income was claimed to be exempt under section 11 of the Act. It is also a fact on record that on the impugned payments, the assessee have not deducted tax, as required under the provisions of the Act. Since the income of the assessee is exempt in view of these sections, the income of the assessee is not taxable under the head income from business or profession , appearing in Chapter-IV of the Income Tax Act. Section 40(a)(ia) of the Act is a part of Chapter-IV for the purposes of computing the income under the head business income . We are in agreement with the submissions of the assessee and also the findings of the learned CIT (Appeals) that the provisions of section 40(a)(ia) of the Act can be invoked only for the purposes of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H), whereby at the end of para 6, the Hon'ble High Court observed as under : In fact wherever the statute contemplated the income being computed in the manner set out in the provisions of the Act, appropriate words are used. For instance, in s. 80E, which was considered by the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 ITR (SC) 50 : (1978) 113 ITR 84 (SC), after the expression 'total income' the following words are added in brackets : 'as computed in accordance with the other provisions of this Act'. This emphasises that wherever Parliament considered that the computation should be in accordance with the provisions of the Act, it introduced the concept by using appropriate language. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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